March 18, 2025

Trading Halt on IHSG: Understanding the Market Shock

Market Commentary

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A Sudden Halt in Trading – March 18, 2025
Investors were caught off guard on Tuesday, March 18, 2025, when the Indonesia Stock Exchange (IDX) activated a trading halt after the Jakarta Composite Index (IHSG) tumbled by more than 5% in a single session. The abrupt halt came as panic selling gripped the market, fueled by a mix of global uncertainties, domestic fiscal concerns, and investor sentiment shocks. While the pause was meant to provide a cooling-off period, many investors were left questioning: What exactly triggered this sharp decline?

JCI Performance in 10min candlestick

Unpacking the Key Drivers Behind the Drop

Domestic Fiscal Worries Deepen Market Jitters
While global pressures weighed on the market, Indonesia’s internal challenges further exacerbated the situation. A 30% decline in government revenue widened the national budget deficit, raising concerns about the country’s fiscal health. Meanwhile, the public debt surged by 44.77% YoY in January 2025, sparking fears over long-term economic stability. Investors, saw these figures as red flags, prompting a wave of sell-offs.

However, we believe investor should not worry about Indonesia’s domestic fiscal condition. When covid strikes, Indonesia’s budget deficit was above 6%, and since 2022, the budget deficit has gone back below 3%. With government spending being slashed dramatically, we believe this concern has been answered.

Indonesia's Budget Deficit

Political rumor
Amidst the market turmoil, speculation emerged regarding potential changes in key government positions. Although these rumors were swiftly addressed by official statements, uncertainty surrounding leadership stability momentarily impacted investor confidence. In sensitive market conditions, even unverified reports can contribute to heightened volatility.

Weakening Consumer Spending Sends Red Flags
Investors also took note of a troubling trend: declining consumer purchasing power.

With retail sales slowing ahead of Idul Fitri, concerns grew that businesses, particularly in the fast-moving consumer goods (FMCG) and retail sectors, would struggle in the coming months. This further dampened market sentiment, as investors anticipated weaker corporate earnings.

Indonesia's Retail Sales Data

A Time for Caution and Strategy
The events of March 18, 2025, serve as a stark reminder of how quickly market sentiment can shift. While panic selling and abrupt sell-offs create uncertainty, long-term investors would be wise to stay focused on fundamentally strong companies like BBCA (TP of Rp11,500, implying 5.0x 2025F PB) and seek opportunities amidst the turmoil. However, with margin call risks still looming, traders should remain cautious and manage leverage carefully. As always, staying informed and understanding market dynamics will be key in navigating the days ahead.

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